Is Uber in a "death spiral"?

The 'Reshaping Work' conference took place on Friday [10 August], and was headlined by a fascinating key note speech from gig economy author and scholar Juliet Schor. 



The US academic presented new research based on data from a nationwide package delivery platform based in California. The study found that the shift from being an 'independent contractor' to an employee at the firm did not reduce flexibility for the worker, a finding completely at odds with what the big platform companies have been telling us for years. Click here to read our full report of Schor's speech. 



We will just highlight one aspect of Schor's talk here. Her analysis of the ride hail and food delivery platform sectors was that neither looks to be capable of attaining profitability, at least not at its present size. These industries are only as large as they are now because they are riding a wave of finance capital that is yet to hit the rocks. 



Investors bought into the idea that Uber was going to replace the taxi worldwide, and that cash influx allowed the company to subsidise prices to the tune of 40% in the US, as they chased a monopoly position through setting prices so low that it would destroy all possible competition. Yet Uber's plan for global domination has continually hit hurdles, be it regulatory push-back, market competition or illusions in the speed of technological change in the mobility sector. Investors are starting to wonder whether the company will ever be profitable. CEO Dara Khosrowshahi had promised profitability by 2021, but, as Schor points out, this has been another year of missed targets, with a -38% profit margin for the first half of the year. 



"Uber is the lose-est company in human history," Schor stated, explaining that their losses since 2009 are estimated to be between €25-28 billion.



The company is now raising prices while struggling to attract drivers, a combination that could see customers turn away. Is Uber a big bet by finance capital gone wrong? Is the whole of the ride hail and food delivery platform sector an unsustainable bubble based on dirt-cheap prices that can't be sustained, and on a 'lean' model of outsourcing all the risk to the worker that is increasingly not accepted? Schor, who described Uber's present situation in the US as "a kind of death spiral", is by no means the only economist to believe that the writing is on the wall.



Ben Wray, Gig Economy Project co-ordinator

Gig Economy news round-up

• OCADO ZOOM WORKERS VOTE TO STRIKE: Delivery workers for online retailer Ocado have voted to strike against outsourcing and poverty pay. Payslips have shown that one Ocado Zoom rider was earning as little as £2.91 an hour in the last week of July. The workers are hired as 'independent contractors' through subcontractor Ryde. The company has responded to pressure by announcing plans to bring the delivery workers in-house, but the IWGB union (which represents the workers) has warned that none of the workers have been consulted and the new plans could be 'fire & re-hire tactics'. Read our full report about the Ocado strike vote here.
• BARCELONA GLOVO STRIKE POSTPONED AS NEGOTIATIONS CONTINUE: THE CCOO union has announced another postponement in plans for Glovo 'dark supermarket' riders to go on strike, as negotiations with the food delivery platform continue. Negotiations began over a week ago after Glovo finally agreed to talk following three days of unprecedented strike action at the end of August. The union says the company "has put on the table direct indefinite hiring for the entire staff of supermarket distributors", but no agreement has yet been reached. 
• CABIFY FINED €187,515 IN SPAIN: Private hire firm Cabify has been sanctioned €187,515 by the Spanish Government for illegal transfer of workers. The Labour Inspectorate found that as a result of the illegal transfer to a subcontractor, 57 employees were subject to a collective bargaining agreement lower than what they would have been entitled to if hired by Cabify directly. The complaint had been brought forward by the union Elite Taxi Association, which is pursuing a number of legal complaints against private hire firms, the details of which can be found here. 
• UK UBER DRIVER SHORTAGE INTENSIFIES: The UK is suffering a general labour shortage, and private hire cars are no different. Customers have been complaining on social media that it's increasingly difficult to get an Uber, and when they do the drivers are frequently cancelling trips that are financially unattractive. Thousands of private hire drivers left the sector during the pandemic due to a drop in demand. Read more here. 
• CCOO AND UGT DENOUNCE UBER EATS: Spain's two big unions, CCOO and UGT, have collectively denounced Uber Eats to the National Court for an illegal collective dismissal of more than 3,000 riders. Uber Eats disconnected all of its 'self-employed' delivery workers on 12 August, the day the 'Riders Law' came into force which is intended to prevent fake self-employment in the sector. The unions say the disconnected riders should have been treated as employees with redundancy rights. Uber Eats is now only hiring riders via subcontractors. Read more here. 
• GLOVO EXPANDS IN AFRICA: Spanish food delivery platform Glovo has announced plans to expand its operations in Africa, stating that it will invest €50 million over the next year as it grows its presence in Ghana and launches in Tunisia in October. The company is currently operating in more than 40 cities in Morocco, as well as in Uganda, Kenya, Côte d’Ivoire and Nigeria. Glovo has sparked controversy for its aggressive anti-workers' rights stance in Spain, and Tech Crunch reports that "in markets like Africa, there are fewer concerns regarding the working conditions of riders, which undoubtedly appeals to what these global players fancy."

On GEP this week